Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

To get this straight: if both spouses are eligible for catch-up contributions then each person must have their own HSA account which must split the family maximum between them, then add their $1000 catch-up contribution. Can this be done if they have only one HSA eligible family policy between them? Or must each adult have their own policy to qualify for this? We will have one child still a home and therefore will benefit from a lower family maximum out-of-pocket amount vs. each adult having their own separate policy with the child added to one. We are both retired and no employer is involved, if that matters.

Yet another confused first timer, planning for next year

My recollection is that DW and I could split the family contribution however we wanted, and then the catch-up went into each of our HSA accounts. So in our case, the minimum contribution to either of our accounts was $1,000 and the maximum was the family contribution + $1,000 and the total contributions combined could no exceed the family contribution +$2,000.

Since my HSA was larger from when i worked and hers was smaller since it was just catch-up contributions, since we retired my contributions have been catch-up only with the remainder going to her HSA. So in 2013, $1,000 went into my HSA and $7,450 went into hers.

To get this straight: if both spouses are eligible for catch-up contributions then each person must have their own HSA account which must split the family maximum between them, then add their $1000 catch-up contribution. Can this be done if they have only one HSA eligible family policy between them? Or must each adult have their own policy to qualify for this? We will have one child still a home and therefore will benefit from a lower family maximum out-of-pocket amount vs. each adult having their own separate policy with the child added to one. We are both retired and no employer is involved, if that matters.

Yet another confused first timer, planning for next year

Yes, it can be done and I've done it since 2008. My wife and I are under my family HDHP employer sponsored plan. (Wife's employer also provides employees with an HDHP but under far less favorable terms than my employer's plan so we decided to have family coverage under my plan.) We've both been making catch-up contributions since 2008, but we had to open up a separate HSA for her -- we use the same HSA custodian for convenience, though I think she would be able to open her own HSA account with any suitable custodian. We've done this during years we've been employed and continued it into our retirement last year.

The only catch I can see is that my wife turns Medicare eligible two years before me, at which time I don't believe she can continue to make catch-up contributions to her HSA; meanwhile, if we're still on my family HDHP I can continue to make HSA and catch-up contributions until Medicare kicks in December 2018, when I turn 65).

I don't have the specific IRS literature that allows me to do this, but I researched it before, my accountant has signed off on this, and our tax returns have been filed with my wife deducting her HSA catch-up contribution since 2008. (My HSA contributions were made by payroll deductions until this year when I no longer had any wages from which to make HSA contributions.) And though I've had the IRS question me on several tax items over the last few years, it has never suggested I'm doing something wrong here with the HSA.

So it sounds like we'll have to open separate accounts when the time comes (a couple of months), so that we can each contribute catch-up amounts. That's a good enough reason right there to go with two accounts.

Thank you to both pb4uski and ChrisC for your detailed and comprehensive answers.

It appears we can both have HSAs. I shall just have to decide how to split the cash up to get the lowest fees overall. I believe TFB (the finance buff) has some info on his blog on HSA providers. I intend for this money to be in stocks long term. We may not be able to use the funds for a few years anyway as we may still be able to itemize and that will render our medical expenses ineligible to be claimed for those years.

__________________
too cheap to even use dryer sheets - never mind recycle them!

We both have HSAs with a family HDHP. What I did to reduce fees the first year was to open the account in early April last year with contributions for both the previous year (2012) and the then current year (2013) split evenly. We only had to pay the fee for 2013, although I did get a notice requesting the fees for 2012 but a phone call confirmed I/we did not have to pay them because of the opening date. I will be eligible for the catch-up amount this year. We are not planning to withdraw any funds for 13 or more years, so we have them invested in stocks and they are up over 20% so far, even after the fees.

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

Both spouses can contribute the maximum to their own family-plan HSAs as long as they are not married to each other.

We went for separate accounts because I misunderstood the catch up rule. Two HSA accounts is a PITA, especially when they are used for investment. The only potential problem is the account cannot be joint, has to be in the name of the primary policyholder.

Quote:

Originally Posted by MichaelB

You don't need to merge them. As LOL pointed out, if your HDHP is a family plan, just deposit the total yearly contribution in your account and close the other one.

Good question. My guess is when your husband retires, if the HSA account is in his name, the bank won't take any more deposits and you'll need to open a second account. Smart move is to do that now, keep all the funds in the account in your name so you can continue depositing until you hit Medicare age.

Quote:

Originally Posted by LOL!

Both spouses can contribute the maximum to their own family-plan HSAs as long as they are not married to each other.

I guess in theory that with 2 kids, the family could have 2 HDHPs and each parent could put one child on their plan. It would be a little insane because the costs would be much more than any benefit.

From the link

Quote:

If both spouses meet the age re-quirement, the total contributions under family coverage cannot be more than $8,450. Each spouse must make the additional contribution to his or her own HSA

So, for catch-up contributions each spouse must make it it in a separate HSA account. This is how I originally understood it, changed my view based on a past discussion (and didn't read the IRS pub).

Quote:

Originally Posted by tessaduncan

Has anyone funded an HSA with funds from an IRA? I understand it can be done only once and up to the HSA contribution limit. If one has a family plan, can both spouses contribute the maximum to their own HSAs? With 2 spouses on a family plan and catch-up for each, the total amount would be $15,100... sort of a Roth conversion with no tax consequences??

I think you're confusing the total out of pocket with the HSA contribution. The max HSA contribution for 2014 is $6550 for a family plan, plus an additional $1k catch up for over age 55.

MichaelB - I am aware that the HSA contribution is as you stated. ($6550 + $1000) x 2 = $15,100 for a couple. Can that amount be '"rolled over" from IRAs into an HSA (a one-time event)? Or is it subject to the same limits as contributions?

MichaelB - I am aware that the HSA contribution is as you stated. ($6550 + $1000) x 2 = $15,100 for a couple. Can that amount be '"rolled over" from IRAs into an HSA (a one-time event)? Or is it subject to the same limits as contributions?

It is NOT x 2. It is X 1 because it is a FAMILY plan. It is $6550 for the family HDHP plan plus any catch-up. A married couple with one family HDHP cannot contribute more thant $6550 plus any catch-ups to the HSA. Please read the IRS publication.

My previous response was if you had TWO HDHPs. One for each parent+child. Two HDHPs would cost you twice as much as one HDHP. It is not the HSA that costs you twice as much. It is the cost of the second HDHP that you don't even need since the first HDHP would have covered the other 2 members of the family.

In our family, one spouse has their own employee-sponsored health insurance. The other spouse plus kids are on a HDHP and associated HSA. The "family" in the family plan HDHP excludes the spouse with their own separate health insurance.

Latest Threads

Social Knowledge Community

About Us

This community was started in 2002 as an alternative to a then fee only Motley Fool. The focus of the discussions is on topics related to early retirement and financial independence. The community is moderated to ensure a pleasant experience for our members.